What the heck is a semiconductor, and why should the prominence of semiconductors in everyday life make us even more concerned about China? There is a somewhat complex answer to that question that Americans need to be aware of, especially when it comes to the biggest rival of the U.S., China.
Quick backstory:
Since its separation, mainland China has vowed to one day recapture Taiwan. This insatiable need for Chinese reunification to Taiwan’s now independent island country is somewhat a piece of Chinese lore. The Chinese Communist Party (CCP) believes that they are the prophetic, rightful rulers of Taiwan. For obvious reasons, Taiwan doesn’t want that to happen.
But beyond the surface level of ‘fulfilling mainland Chinese prophecy,’ there are MASSIVE financial implications that would result from China taking over Taiwan.
Semiconductors: the unsexy topic that is SUPER important.
What’s a semiconductor? Well, that’s a complicated question, but essentially, and for the sake of this article, they are the computer chips that make pretty much every piece of technology in the modern world work. Semiconductors are in your cell phones, computers, coffee makers, refrigerators, sprinkler systems, cars, and almost everything with an ‘on’ button. Bottom line: we need semiconductors.
Insert Taiwan, the global leader in semiconductor manufacturing.
Without getting into all the nitty-gritty details of semiconductor manufacturing, here’s a mind-boggling stat. The tiny island nation of Taiwan produces 63% of the world’s semiconductors.
Woah. One small island with a population of only 23 million people makes almost two-thirds of arguably the world’s most valuable commodity.
For semiconductor manufacturing references, South Korea comes in 2nd with 18%. China has 6%, and the rest of the world combined manufactures a minuscule 13%. You’ve probably already connected the dots, but to put it bluntly, China really really wants to absorb Taiwan’s semiconductor manufacturers.
And this is the world’s problem.
IF China were to make a move on Taiwan, which they’ve promised, what does the U.S. do? We don’t have any agreements with Taiwan to come to their defense. Our official U.S. position is ‘strategic ambiguity.’ So what? Do we let it happen and therefore give China overwhelming control of the semiconductor market? Or, do we go to war with the rising global superpower that is China?
*ring, ring* paging Thucydides.
PS, if you’ve never heard of Thucydides, you’re likely unaware of the Thucydides trap. Not to fear, click here and it’ll all make sense. Hopefully.
